Nokia is taking advantage of Huawei’s 5G pain

Nokia is taking advantage of Huawei’s 5G pain

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The Finnish telecom equipment maker said Thursday that sales increased 7% in the second quarter to €5.7 billion euros ($6.3 billion). Analysts had expected revenue of €5.4 billion ($6.1 billion).
Nokia also said it has 45 commercial deals in place for 5G, and nine of those networks are already live. The momentum could continue, in part because of security concerns facing Huawei.

“Some customers are reassessing their vendors in light of security concerns,” Nokia said in its earnings statement. Shares were up 6.8% in early trading.

Huawei has come under pressure from the Trump administration, which says the Chinese government could use the company’s equipment for snooping. Huawei denies the allegations.

In May, President Donald Trump signed an executive order barring US companies from using telecommunication equipment from sources the administration deems a national security threat.

The United States has since said it would ease restrictions on the ban, but the details remain unclear.

Nokia (NOK), Ericsson (ERIC), and Huawei sell networking gear that powers mobile phone networks. As wireless companies race to build out 5G networks, the three networking companies are competing to win contracts. As of June, Huawei had won 50 commercial 5G contracts globally.

Tommi Uitto, president of mobile networks at Nokia, told CNN Business last month that the political situation has opened the door for Nokia to grab market share.

“There are some countries that have banned Chinese competitors, and of course that creates an opportunity for us,” Uitto said.

The wireless companies that purchase telecommunications equipment have been forced to adjust to the shifting regulatory landscape. On Monday, for example, the UK government said it needed more time to decide whether Huawei equipment should be banned from the country’s mobile phone networks.

In the United States, where nationwide wireless companies had been shying away from Huawei even before the Trump administration ban, Nokia has signed some of its largest deals to date.

Huawei is laying off more than 600 people in the United States
Its highest-revenue 5G contract globally is a $3.5 billion deal it signed with T-Mobile USA (TMUS) last summer. Nokia is building a 5G network for T-Mobile. It has also worked with Verizon (VZ) on 5G tests.

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